2 November 2011: Remarks by Deputy Secretary of State Thomas Nides at U.S.-Canada Innovation Conference

Good morning. Thank you Don for the kind introduction. I greatly appreciate all the work that you, Ambassador Jacobson, and your teams at Canada 2020 and the U.S. Embassy have put into this event. I am honored to share the stage this morning with His Excellency the Right Honorable David Johnston and the Honorable Gary Goodyear.

Some people might start worrying about Canadian weather in November. But I'm originally from Minnesota, so this feels like home. Actually, I grew up in Duluth. That's technically farther north than Ottawa. So I didn't even bring a jacket.

I really did grow up a short drive from Canada. Minnesota is a border state, so that makes you more like cousins than neighbors of a different nationality. And that proximity shapes our thinking and our relationship. I am proud to be here representing my country to our next-door neighbor. And I welcome this chance to talk about the opportunities we have to maximize the benefits that the rock-solid partnership between Canada and the United States delivers for our people.

I come here today as a diplomat, but also as a recovering businessman. In fact, one of the reasons that I was so eager to join the State Department was that Secretary Clinton understands how important business and diplomacy are to each other. Several weeks ago, the Secretary laid out her vision for what she called "economic statecraft" -- how we use our diplomacy to strengthen our economy at home, and how we use economic tools to strengthen our diplomacy abroad. We followed that up by sending formal instructions to every American diplomatic post around the world, highlighting the need to elevate the role of economics and business in everything we do. One of the things Secretary Clinton asked our diplomats to do in that message is to pursue a North American competitiveness agenda.

We are making it a diplomatic priority to help connect American companies with international opportunities. And that means we have to break down barriers to trade, investment and fair competition so that our presence around the world drives our economic recovery at home. We also view a strong economy as critical to American leadership in the world. And so we are looking for more connections and opportunities beyond our borders.

Now, in a world driven by crises and 24-hour news cycles and Twitter updates, it's easy to lose the thread of steady and reliable good news stories. Pundits often talk about the importance of trade with Asian economies or the BRIC countries. But make no mistake, Canada is still our number one trading partner, and Canada is central to our economic statecraft.
Trade between Canada and the United States is so large that just the increase in trade between our countries -- $96 billion last year -- is more than total U.S. bilateral trade with Brazil. It's double our bilateral trade with India. And it's triple our bilateral trade with Russia.

The U.S.-Canadian trade relationship is similarly critical to the Canadian economy. Again, just the increase in trade between the United States and Canada in 2010 was more than ALL of Canada's combined trade with China and Mexico. This same increase was nearly five times greater than ALL of Canada's trade with the Asian Tiger economies of Singapore, Korea, Taiwan and Hong Kong. Canada trades more with the United States in a two-month period than it does with all the BRIC countries in a year.

The fundamentals of our relationship with Canada are so strong that we have a rare opportunity to fine tune the details and create a virtuous circle of economic growth that will propel both our nations forward.

If we continue working to lower the remaining barriers, we will open up new avenues for innovation and cooperation between our businesses, our scientists, and our local governments. Innovation can spur new North American ventures that create jobs and sharpen our competitive edge in the global marketplace. This will create new opportunities for exports and open up new markets. And that in turn will create even more jobs and feed sustained economic growth for both our nations.

We are continental partners encountering global challenges shoulder to shoulder from Libya to Afghanistan. The only question is how we can leverage our existing relationship to better unleash the natural innovative engines of our people -- and how we can better work together to protect and advance our shared values of fairness, openness, and mutual responsibility as the international economic order evolves.

We believe there are three main areas in which the United States and Canada can improve our cooperation in the 21st century: first, continuing to boost our trade relationship by promoting regulatory harmonization; second, facilitating foreign investment; and third, securing intellectual property rights on both sides of the border.

The first main area involves the mandate of both our governments to streamline our regulatory systems and improve North American competitiveness. The zero-sum model competition is badly out of date. Our countries don't just compete. We make things together. One great example of this comes from GeaCom -- an innovative company based in my hometown of Duluth, Minnesota. GeaCom uses components sourced from Vancouver to make the Phrazer, a handheld communication system for collecting medical records that recognizes and interacts with the patient in his or her own language. GeaCom is now actively marketing the Phrazer to medical professionals across Canada and other countries around the world. I wonder if the Phrazer has a special setting to translate Canadian to American...

This is just one of many successful supply chains where raw inputs and finished products ship back and forth to customers on both sides of the border. But if we make sure that our standards are in sync both north and south of our shared border, we will create many more.

That's why President Obama and Prime Minister Harper announced the Beyond the Border initiative and the Regulatory Cooperation Council this year. These initiatives will continue reducing border barriers and help add to the 10 million American and Canadian jobs our bilateral trade already supports.

But even as we make our processes more efficient we must also maintain and strengthen the elements that drive our developed economies. Our cross-border connections are among our greatest assets. For example, the members of the Pacific Northwest Economic Region recognize that their individual resources add up to greater economic benefits when they integrate and innovate—they don't let borders hold them back. And companies and people are better because of it.

In the same way, our academic institutions have made a habit of sharing students, researchers, even leadership. I'll note that you have the leaders of two of America's leading universities -- Berkeley and Johns Hopkins -- on the academic panel later today. Both are Canadian by birth and training. This level of integration is the natural offshoot of how close our countries are, and we want to make sure we continue to nurture this in the future. And I am proud to announce that the State Department will fund a Fulbright Scholarship program next year dedicated to studying cross-border innovation between the United States and Canada.

The second main area is facilitating foreign direct investment. We can make real progress here. Foreign investment is vital to American economic growth and job creation. It stimulates our economy. The volume of foreign investment in the United States is a testament to the enduring strength of our economy and the skill of our workers. As one of our top foreign direct investors, this is something Canada knows well. Canada's stock of foreign direct investment in the United States stood at $306 billion in 2010.

Meanwhile, Canada's stock of inward foreign direct investment has increased by 72 percent in the last decade. More than half of those investments came from the United States. The stock of U.S. foreign direct investment in Canada stood at $250 billion in 2010.

In many ways, Canada is at the cutting edge when it comes to foreign direct investment. Unfortunately, not in every way. Some of Canada's investment laws and regulations restrict foreign investment in key sectors critical to innovation.

In our complex and integrated 21st century economies, locking out innovation based on citizenship or where a company chooses to incorporate doesn't just affect the consumer. It can be heard across multiple industries and the entire economy. And it can undermine our united front when we take on more aggressive restrictions on investment elsewhere.

Now we know the United States is far from perfect. We have our own protectionist impulses to contend with. They can impede foreign direct investment on our side of the border as well. To help address this, President Obama signed an Executive Order in June creating SelectUSA -- an initiative that complements the work our states and governors are doing to promote foreign investment by improving transparency and connectivity at the federal level.

The President and Secretary Clinton believe that sustaining and expanding international investment flows -- backed by sound regulations -- is critical to our economic recovery. Our success depends on committing ourselves to creating an open environment for investment. So we are doing everything we can to make it easier for business to invest in America. And we urge Canada to consider ways in which it can also encourage greater flows of foreign investment, too.

The third main area revolves around intellectual property rights. In order to attract and sustain investment, we need to make sure intellectual property is fully protected. This is one area where the United States and Canada should bring the power of our shared values to promote and enforce a respect for international standards.

Both our nations understand that the greatest asset in our knowledge-based economies is the ingenuity and creativity of our people. That idea is the driving force behind this conference. And as the closest of partners and neighbors, we can and should be allies.
Let me say that this is a critical area where our nations must do more to support one another. Protecting our intellectual property -- the patents, copyrights, trademarks, innovative technologies, and creative products that drive our economic growth -- is a core interest of the United States, and one that we believe Canada shares. Because when innovation is rewarded, there's more of it. And that benefits everyone.

If we can make advancement on these three main areas to improve the way the United States and Canada work together, we will set the stage for our people to make the most of their entrepreneurial talents.

Let me leave you with an example. Westport Innovations is a Canadian firm based in Vancouver. Using research developed and patented at the University of British Columbia, Westport has become a leading provider of the cutting-edge technology that allows engines to operate on clean-burning fuels—sources like compressed natural gas, liquefied natural gas, hydrogen, and biogas. To produce these engines, Westport partnered with the U.S.-based company Cummins and has created the largest natural gas engine company in the world supporting hundreds of jobs in both the U.S. and Canada. Now, Westport has also reached an agreement with General Motors to continue researching and refining their technology and make it part of GM's new engines -- and consequently created new jobs in Plymouth, Michigan where Westport conducts research and automotive integration work.

When this relationship fires on all cylinders, the United States and Canada can be an unstoppable team. And with the fierce competition out there, we can't afford to be anything less.

The future of North America depends on our capacity to innovate, to create new jobs and find new ways to compete. And the stakes are high. As Secretary Clinton has said, in today's world, the reach and influence of countries around the world depends on their economic strength at home. For the United States and Canada, continued growth is paramount for the millions of people waiting for economic recovery and for the preservation of our international leadership.

This is a challenge we can rise to meet together. Today we have the opportunity to discuss collaboration across the full spectrum of the U.S.-Canada relationship. So I ask you to keep pushing the envelope and keep looking for new arenas of cooperation. And I promise that we in America's government will do all we can to make sure our partnership is solid, steady, and growing stronger all the time.